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Synchrony Financial Launches $2.9 Billion Share Buyback Program; Will Maintain Dividend

By Eric Volkman - May 25, 2021 at 7:32PM

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The repurchase initiative will be in force for slightly over one year.

Retail store credit card services specialist Synchrony Financial (SYF 5.19%) announced a pair of shareholder-remuneration moves on Tuesday. The company said it was launching a new stock repurchase program, and it set its current dividend policy.

As for the former, Synchrony's board of directors has authorized it to buy up to $2.9 billion worth of its stock. That program stretches back retroactively to this past April 1, and will be in force through June 30, 2022. It supersedes a previous buyback initiative that was announced in January.

Woman paying for merchandise at a store with a payment card.

Image source: Getty Images.

The company provided few details about how it plans to repurchase its shares, saying only that this will occur "from time to time subject to market conditions and other factors, including legal and regulatory restrictions and required approvals."

Synchrony's dividend will remain level for now, the company added, although it opted not to say for how long it planned to maintain that policy. Since August 2019 Synchrony has paid a quarterly dividend of $0.22 per share. On the stock's most recent closing price, that yields 1.9%. 

It's very possible that the primary motivation behind the two moves is to support Synchrony shareholder morale.

As the company is heavily involved in the retail sector, its performance has been affected by the widespread store shutdowns that occurred last year in the thick of the coronavirus pandemic. In 2020, revenue fell by nearly 18% (to $12.8 billion) on a year-over-year basis, while net profit sank by a steep 37% to $1.39 billion.

Synchrony's shares fell by 0.3% on Tuesday, while the S&P 500 slipped by 0.2%.

 

Synchrony Financial is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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